Form 10-Q
Securities and Exchange Commission
Washington, DC 20549
QUARTERLY REPORT PURSUANT TO SECTON 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
-------------------------.
Commission file number 0-17080
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UNITRONIX CORPORATION
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(Exact name of registrant as specified in its charter)
New Jersey 22-2086851
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Newbury Street, Peabody, MA 01960
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(Address of principal executive offices)
(Zip Code)
(978) 535-3912
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(Registrant's telephone number, including area code)
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Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
9,643,718 shares of common stock, no par value, as of November 13, 2000
1
UNITRONIX CORPORATION
INDEX
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Page Number
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Part I. Financial Information (Unaudited)
Item 1:
Consolidated Balance Sheets-
September 30, 2000 and June 30, 2000 3
Consolidated Statements of Income -
Three Months Ended September 30, 2000 and 1999 4
Consolidated Statement of Changes in Stockholders' Deficit-
Three Months Ended September 30, 2000 5
Consolidated Statements of Cash Flows -
Three Months Ended September 30, 2000 and 1999 6
Notes to Consolidated Financial Statements 7
Item 2:
Management's Discussion and Analysis of Results of 10
Operations and Financial Condition for the Three Months
Ended September 30, 2000
Part II. Other Information 12
2
UNITRONIX CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
September 30,
2000 June 30,
(Unaudited) 2000 (1)
ASSETS ----------- --------
CURRENT ASSETS:
Cash $25,601 $35,452
Accounts receivable, net of allowance for doubtful
accounts of $11,692 and $8,232 at September 30 and
June 30, 2000, respectively 45,979 48,015
Notes receivable 114,583 125,000
Prepaid expenses and other current assets 3,309 4,339
--------- ---------
TOTAL CURRENT ASSETS 189,472 212,806
Notes receivable, long term portion - 20,833
Property and equipment, at cost less accumulated
depreciation of $439,013 and $437,671 at September 30 and
June 30, 2000, respectively 13,741 15,083
Goodwill, less accumulated amortization of $1,952 at
September 30, 2000 and $1,220 at June 30, 2000 56,614 57,346
Other assets 3,171 4,328
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TOTAL ASSETS $262,998 $310,396
========= ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes payable - related parties $724,716 $687,195
Accounts payable 102,902 106,653
Accrued expenses 55,960 54,842
Accrued interest-related party 26,899 34,481
Deferred revenue 61,062 77,837
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TOTAL CURRENT LIABILITIES 971,539 961,008
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COMMITMENTS AND CONTINGENCIES
Series A preferred stock, $1 par value, 6% cumulative
convertible nonvoting; authorized 1,000,000 shares;
956,728 issued and outstanding at September 30 and
June 30, 2000, net of unamortized issuance costs of
$1,925 at September 30, 2000 and $2,200 at June 30,
2000, plus undeclared accumulated dividends of $129,159
at September 30, 2000 and $114,808 at June 30, 2000 1,083,962 1,069,336
STOCKHOLDERS' DEFICIT:
Common stock, no par value; authorized 14,000,000 shares;
9,643,718 shares issued and outstanding at
September 30 and June 30, 2000 3,487,912 3,487,912
Additional paid-in capital 47,875 48,150
Accumulated deficit (5,328,290) (5,256,010)
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TOTAL STOCKHOLDERS' DEFICIT (1,792,503) (1,719,948)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $262,998 $310,396
========= ========
(1) Derived from audited financial statements.
See accompanying notes to financial statements.
3
UNITRONIX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
September 30,
2000 1999
------ ------
REVENUE:
Software licenses $8,750 $6,470
Software related services 100,819 145,868
Maps and related services 14,427 -
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TOTAL REVENUE 123,996 152,338
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COSTS AND EXPENSES:
Cost of software related services 33,549 51,185
Cost of map production 886 -
Software development costs 19,141 -
Selling and marketing expenses 9,398 29,646
General and administrative 112,303 75,649
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TOTAL COSTS AND EXPENSES 175,277 156,480
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(LOSS) FROM OPERATIONS (51,281) (4,142)
INTEREST INCOME (EXPENSE), NET (6,648) (10,136)
OTHER INCOME (EXPENSE), NET - 275,939
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INCOME (LOSS) BEFORE INCOME TAXES (57,929) 261,661
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PROVISION FOR INCOME TAXES 0 0
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NET INCOME (LOSS) $(57,929) $261,661
======= =======
Basic net income (loss) per share $(0.01) $0.03
======= =======
Shares used in computing basic net
income (loss) per share 9,643,718 9,456,932
======= =======
Diluted net income (loss) per share $(0.01) $0.02
======= =======
Shares used in computing diluted net
income (loss) per share 9,643,718 10,506,064
======= =======
See notes to financial statements.
4
UNITRONIX CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
(Unaudited)
For the Three Months Ended September 30, 2000
Common Stock
-------------- Additional
Shares Paid-in Accumulated Stockholders'
Issued Amount Capital Deficit Deficit
------ ------ ------- ------- -------
Balance,
June 30, 2000 9,643,718 $3,487,912 $48,150 $(5,256,010) $(1,719,948)
Net (loss) (57,929) (57,929)
Unpaid accumulated
preferred dividends (14,351) (14,351)
Amortization of
preferred stock
issuance costs (275) (275)
--------- --------- ------ ---------- -----------
Balance,
September 30, 2000 9,643,718 $3,487,912 $47,875 $(5,328,290) $(1,792,503)
========= ========= ====== =========== ===========
See notes to financial statements.
5
UNITRONIX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended September 30,
--------------------------------
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $(57,929) $261,661
Adjustments to reconcile net income (loss)to net
cash provided (used) by operating activities:
Depreciation and amortization 2,074 1,635
Provision for bad debts 3,460 (4,775)
Decreases (increases) in operating assets:
Accounts receivable (1,424) (24,280)
Notes receivable 31,250 (239,583)
Prepaid expenses and other current assets 1,030 (8,963)
Other assets 1,157 3
Increases (decreases) in operating liabilities:
Accounts payable (3,751) 5,258
Accrued expenses 1,118 (6,272)
Accrued interest (7,582) 7,500
Deferred revenue (16,775) 26,456
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Net cash provided (used) by operating activities (47,372) 18,640
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 37,521 2,000
Repayments of borrowings - (527)
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Net cash provided by financing activities 37,521 1,473
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Net increase (decrease) in cash (9,851) 20,113
Cash at beginning of period 35,452 14,328
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Cash at end of period $25,601 $34,441
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Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $18,169 $5,139
Taxes $1,946 $410
See notes to financial statements.
6
UNITRONIX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies:
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Basis of Presentation
---------------------
The consolidated financial statements include the accounts of Unitronix
Corporation, its majority-owned subsidiary Interactive Mining Technologies,
LLC, and its majority-owned subsidiary, EnerSource Mapping, Inc. All
significant inter-company accounts and transactions have been eliminated.
Unitronix Corporation (the "Company") operates in two business segments. The
Company licenses PRAXA software, which operates on VAX and Alpha computers
manufactured by Compaq Computer Corporation. The Company also provides
software maintenance, training, consulting and custom programming services
in conjunction with the PRAXA software.
The Company is the majority shareholder of Interactive Mining Technologies,
LLC, (IMT) a South Carolina limited liability company, that is engaged in
developing products and services for sale to the mineral exploration, mining
and related investment industries. IMT currently has no marketable products
or services.
IMT in turn is the majority shareholder of EnerSource Mapping, Inc. (ESM) a
Canadian corporation that is engaged in producing and marketing tenement maps
to the mining, exploration and investment communities. At the present time
Goldsat Mining, Inc., a Canadian corporation engaged in mineral exploration
and development, is the only other shareholder in both IMT and ESM.
The accompanying financial statements are unaudited. In the opinion of manage-
ment, all adjustments, which include only normal recurring adjustments necessary
to present fairly the financial position, results of operations, and cash flows
for all periods presented, have been made. The result of operations for interim
periods are not necessarily indicative of the operating results for the full
year.
Footnote disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles has been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's June
30, 2000 Annual Report on Form 10-K.
2. Net Income (Loss) per Common Share:
------------------------------------
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 ("SFAS 128") Earnings per Share, which requires
disclosure of basic earnings per common share and diluted earnings per
common share for all periods presented. Shares used in computing basic and
diluted net income (loss) per share are based on the weighted average shares
outstanding in each period, excluding treasury stock. Basic net income (loss)
per share excludes any dilutive effect of stock options and convertible
preferred stock. Diluted net income per share includes the dilutive effect
of the assumed exercise of stock options using the treasury stock method,
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UNITRONIX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
continued
and the assumed conversion of the outstanding convertible preferred stock. The
following table shows the computation of basic and diluted net income per share:
Three Months Ended
September 30,
------------------
2000 1999
---- ----
Numerator:
Net income (loss) $(57,929) $261,661
Preferred dividend 0 0
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Income available to common shareholders $(57,929) $261,661
======== =======
Denominator:
Weighted average number of shares issued
and outstanding 9,643,718 9,456,932
Assumed exercise of options reduced by
the number of shares which would have
been purchased with the proceeds of
those options - 92,404
Assumed conversion of preferred stock - 956,728
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Total shares 9,643,718 10,506,064
========= ==========
Basic net income (loss) per share $(0.01) $0.03
========= =========
Diluted net (loss) income per share $(0.01) $0.02
========= =========
The number of stock options and warrants outstanding was 1,603,251,and the
number of potential shares convertible into common stock from the exercise of
convertible preferred stock was 637,819 as of September 30, 2000. Neither of
these situations qualify as common stock equivalents for the three month period
ended September 30, 2000, as they would have an antidilutive effect on earnings
(loss) per share.
3. Related Party Transactions
--------------------------
During the three month period ended September 30, 2000, two shareholders of the
Company loaned $27,206 to Interactive Mining Technologies, LLC, the Company's
majority-owned subsidiary, to be used to pay operating expenses. During the
same period, the minority shareholder of EnerSource Mapping, Inc., loaned that
entity $10,315 to pay operating expenses. At the end of the period, the
Company's major shareholder was owed a total of $603,555 by the Company and
IMT, another shareholder was owed $103,500 by IMT, and the minority owner of
IMT and ESM was owed a total of $17,660 by those entities.
During the period ended September 30, 2000, the Company paid $18,169 to it's
principal shareholder for overdue interest on loans that had been granted to
the Company.
8
UNITRONIX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
continued
4. Operating Segments
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The Company organizes its business units into three reportable segments:
software licenses; software related services; and, mineral exploration products.
The segments' accounting policies are the same as those described in the summary
of significant accounting policies except that interest expense and non-
operating income and expenses are not allocated to the individual operating
segments when determining segment profit or loss. The Company evaluates
performance based on profit or loss from operations before interest and income
taxes, not including nonrecurring gains and losses.
A summary of the segment information for the three months ended September 30,
2000 and 1999 is presented below.
Three Months Ended
September 30,
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2000 1999
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Software licenses:
Revenue $8,750 $6,470
Costs and expenses 1,024 60,709
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Income (loss) for segment 7,726 (54,239)
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Software Related Services:
Revenue 100,819 145,868
Costs and expenses 63,974 95,771
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Income for segment 36,845 50,097
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Mineral Exploration Products
and Services:
Revenue 14,427 -
Costs and expenses 110,279 -
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Income for segment (95,852) -
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Total income (loss) for segments $(51,281) $(4,142)
======== =======
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UNITRONIX CORPORATION
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
FORWARD LOOKING STATEMENTS
--------------------------
In addition to historical information, this Quarterly Report contains forward-
looking statements. The forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those reflected in such forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which reflect
management's opinions only as of the date hereof. The Company undertakes no
obligation to revise or publicly release the results of any revision to these
forward-looking statements. Readers should carefully review the risk factors
described in other documents the Company files from time to time with the SEC,
including the Annual Report on Form 10-K for the fiscal year ended June 30,
2000.
The analysis of the Company's financial condition, capital resources and
operating results should be viewed in conjunction with the accompanying
financial statements, including the notes thereto.
RESULTS OF OPERATIONS
---------------------
The Company and it's majority-owned subsidiaries continued to sell PRAXA soft-
ware, software support services and mineral exploration products and services
during the past three months. The only software sale was a PRAXA license
upgrade to an existing customer. EnerSource Mapping, Inc., a majority-owned
subsidiary of Interactive Mining Technologies, LLC, continued in the business
of selling tenement maps to mineral exploration, mining and investment cust-
omers, as well as related services. IMT does not currently have products or
services to market.
Based upon a decision that was made by the Company's Board of Directors, manage-
ment took steps during October, 2000 to attempt to sell the PRAXA business
sector. The business, which includes ownership of the PRAXA software, existing
sales and software support agreements, and certain computer systems and office
equipment, was listed with a nation-wide business broker. If the PRAXA business
is sold, funds resulting from the sale will be used by the Company to finance
development of products and services by IMT. There can be no assurances that
a buyer will be found for the PRAXA business.
10
UNITRONIX CORPORATION
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
(continued)
First Quarter Ended September 30, 2000, Compared to the First Quarter Ended
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September 30, 1999
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During the three month period ended September 30, 2000, revenues decreased by
19% from the like period in 1999. Software license revenue was approximately
the same for both periods, while revenue from software related services
declined by 31%. This decrease was due to reduced revenue from PRAXA support
agreements, a trend that has been on-going for several years and that manage-
ment expects to continue in the future. Revenue from the sale of tenement maps
and related mineral exploration services by EnerSource Mapping, Inc., partially
offset the decrease in software support revenue.
The cost of providing software related services decreased by 34% from the
period ended September 30, 1999,to the period ended September 30, 2000, due
to fewer PRAXA users requiring support and consulting services. Selling
expenses for PRAXA software and support services were reduced to approximately
$2,000 for the period ended September 30, 2000, since the Company no longer
has resources dedicated to selling these products. Approximately $7,000 of
selling expenses were incurred by EnerSource Mapping, Inc.
Software development costs of approximately $19,000 were incurred by Interactive
Mining, LLC, in completing the evaluation phase of its project to develop soft-
ware that will assist it's users in locating commercially exploitable mineral
deposits. A contract to proceed with the development of the software is
currently being negotiated by IMT management with a software development firm.
General and administrative expenses ("G & A") increased by 48% from the period
ended September 30, 1999, to the like period in 2000. The G & A expenses for
the PRAXA software license and software services business sector decreased by
61%, or $46,000, from the 1999 period to the 2000 period. This reduction was
due to a decrease in scheduled work hours and salaries for the software
support staff and the Chief Financial Officer, and the allocation of all of
the time of the Company's product development manager to the Company's subsid-
iaries. G & A expense for the Company's subsidiaries was approximately $83,000
for the three months ended September 30, 2000.
The reduction in revenues and increase in costs and expenses for the consol-
idated companies resulted in a loss from operations of approximately $51,000
for the three months ended September 30, 2000, as compared with a loss from
operations of $4,000 for the like period in 1999.
Liquidity and Capital Resources
-------------------------------
As of September 30, 2000, the working capital deficit was $(782,067) as compared
to a deficit of $(748,202) at June 30, 2000. The increased deficit is due
to lower cash and notes receivable balances and higher notes payable at Septem-
ber 30.
11
UNITRONIX CORPORATION
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
(continued)
Management projects that capital from sources other than operations will be
required to fund the Company's ownership positions in Interactive Mining and
EnerSource Mapping. The Company anticipates raising this capital through the
sale of the PRAXA business sector and the private placement of stock in the
Company. This plan will require that new shares be authorized by the current
shareholders, as there is not sufficient stock available to execute the plan.
The shares held by existing shareholders will be diluted to the extent that
new stock is issued. There can be no assurance that the Company will be able
to raise these additional funds and failure to do so may have a material adverse
impact on the Company's business and operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not currently involved in any legal proceedings.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
The Company did not file any reports on Form 8-K during this quarter.
12
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Unitronix Corporation
Date: November 14, 2000
By: /s/William C. Wimer
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William C. Wimer
Vice President, Operations and
Chief Financial Officer
13
